In this article we discuss the 10 best mutual funds for 2021. If you want to skip our detailed analysis of these mutual funds, go directly to the 5 Best Mutual Funds for 2021.
Amid the economic disruption caused by the COVID-19 pandemic, the mutual fund industry has been undergoing a quiet but significant consolidation. According to United Kingdom-based professional services company PwC, nearly 20% of the thousands of mutual funds in existence today are expected to be bought or eliminated within the next four years. In a report, the British firm claimed that the top five mutual funds will be the ultimate beneficiaries of this consolidation, estimated to account for 68% of total mutual fund assets under management by 2025.
With the endless mutual fund options available to investors today, it has become extremely important to identify the best performing funds that have the potential to weather the sea change that is occurring within the industry. When selecting the best funds, it is prudent to identify investment goals and risk tolerance, review the style and type of fund, go over the fees and loads, and look at the size of the fund and the performance history of the manager before selecting funds that are best suited to particular investor needs.
Mutual funds have been increasingly favoring the foreign markets with explosive growth potential, with many funds having stakes in firms based in China and India. However, some of the mainstays on the top mutual fund lists remain high growth tech stocks like Apple Inc. (NASDAQ: AAPL), Facebook, Inc. (NASDAQ: FB), and Microsoft Corporation (NASDAQ: MSFT). In 2015, a Goldman Sachs study identified the top stock holdings among mutual funds that were dominated by technology companies. Most of these tech firms had impressive year-to-date gains, a metric increasingly important in the volatile markets these days.
Apple Inc. (NASDAQ: AAPL), Facebook, Inc. (NASDAQ: FB), and Microsoft Corporation (NASDAQ: MSFT), however, have reached astronomical valuations since then and are mostly out of reach for retail investors, who are looking for more value options. The best mutual funds for 2021 have been in the ones focusing on the small cap market, since stock volatility in the large cap firms has pummeled entire investment portfolios in recent months. Some of these funds, with impressive year-to-date gains, look set to be a top investment choice for this year.
Retail investor interest in the stock market has also had other far-reaching impacts. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Jason Briscoe on Unsplash
With this context in mind, here is our list of the 10 best mutual funds for 2021.
Best Mutual Funds for 2021
10. JPMorgan Small Cap Value Fund Class R5 (NASDAQ: JSVRX)
Year-to-Date Return: 28.05%
JPMorgan Small Cap Value Fund Class R5 (NASDAQ: JSVRX) is a New York-based mutual fund that invests at least 80% of net assets in stocks present on the Russell 2000 Value Index. The fund primarily focuses on common stocks and real estate investment trusts and uses a value-oriented approach to investment. The fund is placed tenth on our list of 10 best mutual funds for 2021.
JPMorgan Small Cap Value Fund Class R5 (NASDAQ: JSVRX) has more than $1.44 billion in net assets under management with a holdings turnover of 42%. The expense ratio for the fund is 0.87%.
One of the premier holdings of the fund is Abercrombie & Fitch Co. (NASDAQ: ANF), the New York-based lifestyle retailer. JPMorgan Small Cap Value Fund Class R5 (NASDAQ: JSVRX) has invested 0.82% of assets in Abercrombie & Fitch Co. (NASDAQ: ANF).
At the end of the first quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $412 million in Abercrombie & Fitch Co. (NASDAQ: ANF), down from 28 in the preceding quarter worth $283 million.
Just like Apple Inc. (NASDAQ: AAPL), Facebook, Inc. (NASDAQ: FB), and Microsoft Corporation (NASDAQ: MSFT), Abercrombie & Fitch Co. (NASDAQ: ANF) is a top stock option of the best mutual funds for 2021.
9. Columbia Small Cap Value Fund I Institutional 2 Class (NASDAQ: CUURX)
Year-to-Date Return: 28.60%
Columbia Small Cap Value Fund I Institutional 2 Class (NASDAQ: CUURX) is a Boston-based mutual fund that invests at least 80% of net assets in stocks present on the Russell 2000 Value Index. The fund also has a provision of investing a maximum of 20% of total assets in stocks that trade outside the United States. The fund is ranked ninth on our list of 10 best mutual funds for 2021.
Columbia Small Cap Value Fund I Institutional 2 Class (NASDAQ: CUURX) has more than $1 billion in net assets under management with a holdings turnover of 60%. The expense ratio for the fund is 0.93%.
One of the top holdings of the fund is Korn Ferry (NYSE: KFY), the California-based consulting firm that operates in more than 50 countries across the world. Columbia Small Cap Value Fund I Institutional 2 Class (NASDAQ: CUURX) has invested 1% of assets in Korn Ferry (NYSE: KFY).
At the end of the first quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $226 million in Korn Ferry (NYSE: KFY), down from 17 in the preceding quarter worth $196 million.
Just like Apple Inc. (NASDAQ: AAPL), Facebook, Inc. (NASDAQ: FB), and Microsoft Corporation (NASDAQ: MSFT), Korn Ferry (NYSE: KFY) is a top stock option of the best mutual funds for 2021.
8. AB Small Cap Value Portfolio Advisor Class (NASDAQ: SCYVX)
Year-to-Date Return: 32.30%
AB Small Cap Value Portfolio Advisor Class (NASDAQ: SCYVX) is a California-based mutual fund that invests at least 80% of net assets in firms with small market capitalizations as seen on the Russell 2000 Value Index. The fund is placed eighth on our list of 10 best mutual funds for 2021.
AB Small Cap Value Portfolio Advisor Class (NASDAQ: SCYVX) has more than $608 million in net assets under management with a holdings turnover of 48%. The expense ratio for the fund is 0.96%.
A flagship holding of the fund is Terex Corporation (NYSE: TEX), the Connecticut-based heavy machinery company. AB Small Cap Value Portfolio Advisor Class (NASDAQ: SCYVX) has invested 1.46% of assets in Terex Corporation (NYSE: TEX).
At the end of the first quarter of 2021, 31 hedge funds in the database of Insider Monkey held stakes worth $501 million in Terex Corporation (NYSE: TEX), up from 23 in the preceding quarter worth $349 million.
7. DFA U.S. Targeted Value Portfolio Institutional Class (NASDAQ: DFFVX)
Year-to-Date Return: 32.33%
DFA U.S. Targeted Value Portfolio Institutional Class (NASDAQ: DFFVX) is a California-based mutual fund that invests at least 80% of net assets in small cap stocks that the fund believes are undervalued and represent upside potential. The fund is ranked seventh on our list of 10 best mutual funds for 2021.
DFA U.S. Targeted Value Portfolio Institutional Class (NASDAQ: DFFVX) has more than $12.8 billion in net assets under management with a holdings turnover of 20%. The expense ratio for the fund is 0.33%.
One of the top holdings of the fund is Darling Ingredients Inc. (NYSE: DAR), the Texas-based packaged food company. DFA U.S. Targeted Value Portfolio Institutional Class (NASDAQ: DFFVX) has invested 0.82% of assets in Darling Ingredients Inc. (NYSE: DAR).
At the end of the first quarter of 2021, 33 hedge funds in the database of Insider Monkey held stakes worth $756 million in Darling Ingredients Inc. (NYSE: DAR), down from 36 in the preceding quarter worth $667 million.
Just like Apple Inc. (NASDAQ: AAPL), Facebook, Inc. (NASDAQ: FB), and Microsoft Corporation (NASDAQ: MSFT), Darling Ingredients Inc. (NYSE: DAR) is a top stock option of the best mutual funds for 2021.
6. Hartford Small Cap Value Fund Class R5 (NASDAQ: HSMTX)
Year-to-Date Return: 32.49%
Hartford Small Cap Value Fund Class R5 (NASDAQ: HSMTX) is a Hartford-based mutual fund that invests at least 80% of net assets in stocks that have small market capitalizations. The fund may sometimes concentrate on one sector of the market, but largely diversifies its portfolio across different segments. The fund is placed sixth on our list of 10 best mutual funds for 2021.
Hartford Small Cap Value Fund Class R5 (NASDAQ: HSMTX) has more than $140 million in net assets under management with a holdings turnover of 62%. The expense ratio for the fund is 0.90%.
One of the top holdings of the fund is Deluxe Corp (NYSE: DLX), the Minnesota-based financial services company. Hartford Small Cap Value Fund Class R5 (NASDAQ: HSMTX) has invested 2.05% of assets in Deluxe Corp (NYSE: DLX).
At the end of the first quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $55 million in Deluxe Corp (NYSE: DLX), down from 17 in the preceding quarter worth $54 million.
Just like Apple Inc. (NASDAQ: AAPL), Facebook, Inc. (NASDAQ: FB), and Microsoft Corporation (NASDAQ: MSFT), Deluxe Corp (NYSE: DLX) is a top stock option of the best mutual funds for 2021.
Click to continue reading and see 5 Best Mutual Funds for 2021.
Suggested articles:
- 10 Best Dividend Stocks for Passive Income
- 10 Best Healthcare Dividend Stocks
- 10 Extreme Dividend Stocks with Huge Upside
Disclosure: None. 10 Best Mutual Funds for 2021 is originally published on Insider Monkey.